Saturday, August 20, 2005

Debt and Sex

Debt is just like sex. There are benefits - you can consume a lot more - but also risks - you might get pregnant as a result. If you do, you can either have the baby or go bankrupt. You can go bankrupt as long as Roe v. Wade isn't repealed, that is. (I wonder if John Roberts is anti-bankruptcy?) And you can't put your debt up for adoption. Of course, the best way to avoid debt is abstinence: just don't get a credit card. But this isn't a very realistic policy approach. Rather, we should make condoms and other forms of birth control widely available. The only problem is that there is no condom for debt. Maybe this is where a practical policy approach to debt should start.

ADDENDUM: The key similarity is really about risk. Republicans believe in consequences for both debt and sex. This stems from the view that both bankruptcy (see the new bankruptcy bill) and abortion are bad (and perhaps a deeper view that debt and sex are bad.) From an economic point of view, bankruptcy *is* bad to the extent that it causes moral hazard; abortion you can decide for yourself. Yet a fuzzy Democrat ethics might cause us to want both to be available, out of compassion and a willingness to give people a second chance, despite the efficiency loss. It's just about selecting the level of risk that people should bear for their actions. Republicans want people to bear a lot of risk since that will result in less risky actions being taken. Democrats want to minimize risk, since it's bad in and of itself.

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